Last checked at 24 Jun 2016 07:00
24 June 2016
B&M European Value Retail S.A.
Annual Report & Accounts 2016, Notice of Annual General Meeting
and Notice of Extraordinary General Meeting
B&M European Value Retail S.A. (the "Company"), the UK's leading multi-price value retailer, announces that it has posted to shareholders today:
1. The Company's Annual Report and Financial Statements for the year ended 26 March 2016 ("Annual Report & Accounts 2016");
2. Notice of Annual General Meeting of the Company ("AGM"); and
3. Notice of an Extraodinary General Meeting of the Company ("EGM").
Copies of the Annual Report & Accounts 2016, the Notice of AGM and the Notice of the EGM will shortly be available for inspection at www.morningstar.co.uk/uk/nsm , also copies of them are available on the investors section of the Company's website at www.bandmretail.com/investors/agm.aspx
The AGM and EGM will both be held at the Sofitel Grand-Ducal, 40, Boulevard d'Avranches, L-1160 Luxembourg on Friday 29 July 2016, with the AGM commencing at 12:00 noon (CET) and the EGM at 1:00 pm (CET).
Annual General Meeting
In accordance with Disclosure and Transparency Rule 6.3.5R (DTR 6.3.5R) and the requirements which it imposes on how to make public annual financial reports, the following information in the Appendix 1 to this announcement is extracted from the Annual Report & Accounts 2016 and should be read in conjunction with the Company's preliminary results annnouncement for the year ended 26 March 2016 issued on 26 May 2016, which contained a management report and a condensed set of the Company's consolidated financial statements. That information, together with the information set out in the Appendix 1 below (each of which are available at www.bandmretail.com/investors/regulatory-news/search-regulatory-news.aspx) constitues the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service.
This material is not a substitute for reading the Annual Report & Accounts 2016 in its entirety. Terms used, but not otherwised defined in this announcement, have the meanings given to them in the Annual Report & Accounts 2016.
Extraordinary General Meeting
The purpose of the EGM is to propose that the Company makes certain amendments to its Memorandum and Articles of Association. A summary of the proposed changes is set out in the explanatory notes to the Notice of the EGM.
The Notice of EGM and a copy of the Memorandum and Articles of Association, which has been marked-up to show the proposed amendments, are available on the Company's website at www.bandmretail.com/investors/egm.aspx
A summary form of the Notice of EGM is set out in Appendix 2 to this announcement.
Enquiries
B&M European Value Retail S.A.
For further information please contact +44 (0) 151 728 5400
Simon Arora, Chief Executive
Paul McDonald, Chief Financial Officer
investor.relations@bandmretail.com
Media
For media please contact +44 (0) 207 379 5151
Maitland
Greg Lawless
Tom Eckersley
bmstores-maitland@maitland.co.uk
APPENDIX 1
Principal risks and uncertainties
The principal risks and uncertainties relating to the Company are as set out in the "Principal risks and uncertainties" section of the Annual Report & Accounts 2016, pages 22 to 24 (inclusive).
The following is extracted in full and unedited text from the Annual Report & Accounts 2016 and is repeated here solely for the purpose of complying with DTR 6.3.5R.
Principal risks and uncertainties
Risks and uncertainties
The following principal risks and uncertainties could have an impact on our business model and strategy. Mitigating steps aimed at managing and reducing those impacts are being employed by the Group as summarised below.
Risks and mitigation are reviewed as part of the oversight by the Audit & Risk Committee of the system of internal controls and reported on to the Board which takes overall responsibility for risk management.
The Internal Audit function of the Group reports on the effectiveness of internal control procedures to the Audit & Risk Committee as part of annual internal audit plan, taking into account current business risks.
Risk Type
|
Risk Number | Description
| Risk Mitigations
|
Competition |
1 |
The Group operates in a highly competitive retail market both in the UK and Germany and this could materially impact the Group's profitability and limit the growth opportunities. |
● Continuous monitoring of competitor pricing and product offering. ● Development of new product ranges within the product categories to identify new market opportunities to target new customers.
|
Economic Environment |
2 |
A reduction in consumer confidence resulting in a fall in customer spending as a result of the prevailing macro economic conditions in the markets in which we operate. |
● We offer a range of products and price points for consumers which allows them to trade up and down. ● We maintain a low cost business model that allows us to maintain our selling prices as low as possible. ● We have an extensive forecasting process that enables actions to be undertaken reflecting the economic conditions.
|
IT Systems and Business Continuity |
3 |
The Group is reliant upon key IT systems, and disruption to these would adversely affect the businesses operations. Data protection failure may lead to a potential prosecution and reputational damage to the brand. This risk also encompasses the risk of management over-ride of controls. |
● All critical business systems have third party maintenance contracts in place and are industry standard. ● We utilise the services of a third party IT consultancy support to ensure that any investments made in technology are fit for purpose. ● We have a disaster recovery strategy. ● We have an on-going PCI compliance strategy. ● Significant decisions for the business are made by the Group or operational boards with segregation of duties enforced on key business processes, such as the payables process, and a robust IT control environment is in place.
|
Regulation and Compliance |
4 |
The Group is exposed to regulatory and legislative requirements, including those surrounding the import of goods, the Bribery Act, Modern Slavery Act, health & safety, employment law, data protection, the environment and the listing rules, which could lead to financial penalties and reputational damage. |
● We have a number of policies and codes across the business outlining the mandatory requirements within the business. These are communicated to the staff via an employee handbook which is made available to anyone joining the company. ● Operational management are also responsible for liaising with the General Counsel and external advisors where required to ensure that we identify and manage any new legislation. ● We have an internal audit function, and a whistle blowing procedure and policy which allow colleagues to confidentially report any concerns or inappropriate behaviour within the business. |
Credit Risk and Liquidity |
5 |
The Group's level of indebtedness and exposure to interest rate and currency rate volatility could impact the business and its growth plans. |
● A treasury policy is in place to govern foreign exchange, interest rate exposure and surplus cash. ● Regular weekly cash flow forecasts are produced and monitored. ● Forward looking cash flow forecasts and covenants test forecasts are prepared to ensure sufficient liquidity and covenant headroom exists.
|
Commodity Prices/Cost Inflation |
6 |
Escalation of costs within the supply chain arising from factors such as increases in raw material and wage costs. Additionally increased fuel and energy costs impacting on distribution and the store and warehouse overhead base.
| ● Freight rates, energy and currency are bought forward to mitigate volatility and allow the business to plan and maintain margins. ● Wage increases are offset where possible by productivity improvements. ● Forecasts and projections produced by the business include the expected impact of the national living wage and therefore the Board's strategic planning takes account of these effects. |
Supply Chain |
7 |
The lead times in the supply chain could lead to a greater risk in buying decisions and potential loss of margins through higher markdowns. Disruption to the supply chain arising from civil unrest, natural disasters, ethical or quality standards failure could lead to reputational damage and a risk that consumers may be harmed. | ● An experienced sourcing team responsible for maintaining an efficient and effective supply chain. ● A range of alternative supply sources are maintained across the product categories and no single supplier accounts for more than 3% of purchases. ● The combination of individual buyers and supplier employees conduct factory visits.
|
Stock Management |
8 |
Ineffective controls over the management of stock could impact on the achievement of our gross margin objectives, lack of product availability could impact on working capital and cashflows. |
● Highly disciplined SKU count by season and effective and regular markdown action on slow moving product lines. ● Initial stock orders do not exceed c. 14 weeks of forecast sales and action is undertaken after c. 4 weeks of trading to either repeat the order, refresh the product design or delete the product line. ● Consistent levels of stock cover by product category are maintained through regular reviews of open to buy, supported by the disciplined SKU count.
|
Infrastructure |
9 |
The Group could suffer the loss of one of its warehousing facilities which would impact short/medium term trading and could materially impact the profitability of the business. Failure to maintain and invest in the warehousing and transport infrastructure as the business continues to grow the store portfolio. | ● Two new warehouses have been opened during the year and further plans are in place for additional warehousing capacity to support the new store opening programme. ● The Group in the UK has 6 separate warehousing locations and conducts disaster recovery planning. ● The Group maintains adequate business interruption and increased cost of working insurance in the event of such a loss.
|
Key Management Reliance |
10 |
The Group is reliant on the high quality and ethos of the executive team as well as strong management and operational teams. |
● The key senior and operational management are appropriately incentivised through bonus and share arrangements such that talent is retained. ● The composition of the executive team is kept under constant review to ensure that it is appropriate to the delivery of the Group's plans.
|
Store Expansion |
11 |
The ability to identify suitably profitable new store locations is key to delivering our growth plans. |
● Our property acquisition managers actively monitor the availability of retail space with the support of external property acquisition consultants. ● The flexibility of the trading format allows us to take advantage of a range store sizes and locations. ● Each new store opening is approved by the CEO ensuring that property risks are minimised and ensuring that lease lengths are appropriate. ● Where new locations may impact existing locations, the cannibalisation effects are estimated and then monitored and measured to ensure an overall benefit to the Group is realised.
|
International Expansion |
12 |
The ability to develop into new territories is important to the Group's future growth plans. Expanding in to new markets creates additional challenges and risks. |
● Significant international experience on the main Board. The senior leadership team in Germany is experienced and incentivised. ● Clear focus on markets in which we operate to ensure they are appropriate for value retailing and the product ranges are developed and selected by local buying teams rather than through the parent company. ● Continuing to invest in both the infrastructure and technology of our international subsidiaries. ● Monitoring and investigating potential new opportunities for growth in strategically identified locations.
|
Warehouse Management |
13 |
The failure to implement the new warehouse management system effectively. |
● A project management team is in place and this is being headed by an experienced project leader. ● External experts will provide support for the duration of the project. |
All of these risks have an owner within the executive management team of the Group.
APPENDIX 2
B&M European Value Retail S.A.
Société Anonyme
Registered office: 9, Allée Scheffer, L-2520 Luxembourg
Grand-Duchy of Luxembourg
R.C.S. Luxembourg: B 187275
Notice of the Extraordinary General Meeting of B&M European Value Retail S.A. to be held at 1:00 pm (CET) on Friday 29 July 2016 at the Sofitel Grand-Ducal, 40, Boulevard d'Avranches, L-1160 Luxembourg before a Luxembourg notary.
AGENDA
Extraordinary resolution
1. To approve the amendments set out below to the Articles of Association of the Company without amending the corporate object of the Company:
By replacing paragraph 4 of Article 5.2 ("Authorised share capital") of the articles of association of the Company with the text below:
"The Board of Directors is specially authorised to issue such new shares (or grant of options exercisable into shares, rights to subscribe for or convert any instruments into shares) by cancelling or limiting the existing shareholders' preferential rights to subscribe for the new shares (or options exercisable into new shares, or instruments convertible into new shares), provided that the Board of Directors may only issue such new shares (or grant such options or rights) pursuant to the authorisation in this article 5.2 on a non-pre-emptive basis by cancelling or limiting shareholders' preferential rights to subscribe for such new shares (or options or rights):
(1) in respect of the issue for cash of such number of new shares (or the grant of such options or rights in respect of such number of new shares) as represents up to: (A) five per cent (5%) of the issued share capital (as determined based on the latest publicly available information on the Company's share capital at the time of the first issue of shares each year) per year; and (B) an additional five per cent (5%) of the issued share capital (as determined based on the latest publicly available information on the Company's share capital at the time of the first issue of shares each year) per year, provided such additional five per cent (5%) is used only for the purposes of financing (or refinancing, if the authority is to be used within six (6) months of the original transaction and not after the date of expiration of this article 5.2) a transaction which the directors of the Company determine to be an acquisition or other capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-emption Rights most recently published by the Pre-emption Group of the Financial Reporting Council; or
(2) in connection with such arrangements as the Board of Directors considers necessary or appropriate, in the context of otherwise pre-emptive issues of shares, to deal with treasury shares, fractional entitlements, record dates and legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; or
(3) in connection with employee share options or similar awards.
For the avoidance of doubt, these limits fall within the initial one-third limit referred to above."
Ordinary resolution
2. Subject to extraordinary resolution 1 being passed, to confirm that the Directors have full power to issue ordinary shares on a non-pre-emptive basis in respect of shares representing 10% (ten per cent) of the issued share capital of the Company as provided by the Company's Articles of Association at paragraph 4 of Article 5.2 and to acknowledge the Directors' intention to comply with the Pre-Emption Group's revised Guidelines on Dis-applying Pre-Emption Rights (issued in March 2015) supported by the Investment Association and the Pensions and Lifetime Savings Association, to the extent practical for a Luxembourg company.
Explanation of Business to be considered at the Extraordinary General Meeting
Extraordinary Resolution number 1 and Ordinary Resolution number 2
In common with the articles of association of other Luxembourg public limited liability companies, the Articles of the Company provide full power to the Board of Directors to issue ordinary shares on a non-pre-emptive basis under certain conditions within the framework of the Company's authorised share capital which is limited in both time (expiring on the fifth anniversary of the publication of the resolutions taken on 13 June 2014, unless otherwise renewed) and in amount. The Board as a matter of policy intends to comply with the Pre-Emption Group's revised guidelines on Dis-applying Pre-Emption Rights issued in March 2015 which are supported by the Investment Association and the Pensions and Lifetime Savings Association, to the extent practical as a Luxembourg company. This resolution serves to confirm that intention.
Article 5.2 of the Articles currently provides the directors with authority, within the framework of the Company's authorised share capital, to dis-apply pre-emption rights for the issue (a) for cash of shares representing up to a maximum of 5% (five per cent) of the issued ordinary share capital of the Company per year (b) to deal with fractional entitlements on otherwise pre-emptive issues of shares, and (c) in connection with employee share options.
The Directors are proposing an amendment to Article 5.2 of the Articles, within the framework of the authorised capital, to issue ordinary shares representing up to 10% (ten per cent) of the issued share capital of the Company for cash without having first to offer the shares to existing shareholders. This amount is in line with the Statement of Principles.
If this resolution is passed, in exercising the power to allot shares on a non-pre-emptive basis, the Directors intend to adhere to the provisions in the Statement of Principles and not to allot shares for cash on a non-pre-emptive basis:
(a) in excess of an amount equal to 5% (five per cent) of the total issued ordinary share capital of the Company excluding treasury shares; or
(b) in excess of an amount equal to 7.5% (seven point five per cent) of the total issued ordinary share capital of the Company excluding treasury shares within a rolling three year period, without prior consultation with shareholders,
in each case, except where the issue is in connection with an acquisition or specified capital investment which is announced contemporaneously with the allotment or which has taken place in the preceding six month period and is disclosed in the announcement of the allotment.
The 10% limit of the authority under the resolution is to be calculated by reference to the nominal issued share capital of the Company at the time of the first issue of shares in the relevant year when any such authority is exercised.
As at 1 June 2016, being the latest practicable date prior to publication of this Notice, an issue of shares for cash up to an aggregate nominal value of £10,000,000 (being 100,000,000 ordinary shares of 10 pence each) would have represented 10% of the Company's issued ordinary share capital.
At the present time there is no intention to exercise the power to issue shares for cash on a non-pre-emptive basis, except as may be required to satisfy options under the Company's share option schemes.
Notes
Quorum and voting
The quorum for the EGM is shareholder(s) represented in person or by proxy at the meeting who hold at least one half of the issued share capital of the Company.
If this quorum condition is not satisfied a second meeting may be convened, following notices being given of that second meeting under the Articles of Association of the Company. At any second meeting the quorum requirement of the original meeting does not apply, and the quorum is at least one shareholder present in person or represented by proxy.
In accordance with Article 24.6 of the Articles of Association of the Company, all decisions taken at the EGM will be passed:
(i) in relation to extraordinary resolution number 1, by at least two thirds of the votes cast at the meeting on the resolution;
(ii) in relation to ordinary resolution number 2, by a simple majority of the votes cast at the meeting on the resolution.
Each holder of ordinary shares has one vote in respect of each ordinary share held.
Total voting rights
As at 23 June 2016 (being the last business day prior to the publication of this notice) the Company's issued ordinary share capital consists of 1,000,000,000 (one billion) ordinary shares, carrying one vote each. The Company holds no treasury shares, therefore the total voting rights in the Company as at 23 June 2016 is 1,000,000,000 (one billion).
Poll
All items in the Notice of the EGM will be decided by a poll of shareholders